Galaxy Research Cuts CLARITY Act Passage Odds to 10% for 2026

Galaxy Research downgraded its probability estimate for the CLARITY Act becoming law this year to just 10% on August 14, citing Senate calendar pressure, unresolved bill provisions, and sustained bank lobbying as the forces draining momentum from what was once the most promising crypto legislation in U.S. history.

The firm's assessment points to a narrow September window as the last realistic opportunity for Senate action before the legislative calendar closes out. Congress is currently in recess, and when lawmakers return, the agenda will be crowded. Galaxy flagged three specific sticking points that remain unresolved: ethics provisions, stablecoin yield regulations, and developer protection clauses. Each represents a genuine fault line between stakeholders, and none appears close to resolution.

Bank lobbying has added another layer of resistance. Financial institutions have pushed back on provisions that would allow crypto firms to operate in spaces traditionally dominated by chartered banks, and that opposition has had a measurable effect on Senate negotiations. The CLARITY Act was designed to create a comprehensive federal framework for digital assets, splitting jurisdiction between the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) based on asset classification. For the banking sector, that framework poses a direct competitive threat, and their lobbying reflects it.

The 10% figure represents a steep drop from where sentiment stood earlier in 2026, when the bill had bipartisan backing and appeared to be on a credible path to passage. That optimism has since eroded. Mizuho analysts recently cut their BitGo price target while framing CLARITY Act delays as a potential competitive edge for certain custodians, capturing the industry's ambivalence: legislative stagnation creates uncertainty, but it also preserves gaps that incumbents can exploit.

With Congress stalled, the SEC and CFTC are moving to fill the void. Temporary exemptions from the SEC could provide interim rules for crypto firms, a pattern that mirrors the 2021-2023 period when agencies moved ahead of Congress to establish enforcement frameworks in the absence of statutory guidance. That approach carries its own risks: agency-driven rules are more easily reversed, less durable than statute, and subject to legal challenge. Earlier this year, the OCC granted conditional approval for a Trump-backed World Liberty National Trust Bank charter, illustrating how executive-branch agencies are already shaping crypto's regulatory environment without waiting for Congress.

Bipartisan support for some form of crypto regulation has not collapsed, and legislative timelines are notoriously fluid. Bills have cleared major procedural hurdles in compressed windows before. The banking industry's opposition, while significant, has not permanently blocked financial legislation in the past, and specific provisions may still be negotiable. Some observers argue that SEC and CFTC action could actually reduce urgency, giving the Senate more time to reach consensus rather than forcing a rushed vote.

That argument cuts both ways. If regulators provide sufficient interim clarity, congressional pressure to act diminishes, and the CLARITY Act risks becoming another deferred priority. The crypto industry has spent considerable capital, both financial and political, pushing for a statutory framework. As the broader question of whether the industry is funding its own regulatory constraints gains traction, a 10% passage probability signals that the industry's legislative strategy may need to adapt to a world where agencies, not Congress, set the rules first.